The Office for National Statistics points to a series of headwinds to production, including appalling weather that has hit the construction sector and demand for summer fashion in stores.
by James Sellars, business reporter @Sky News Biz
Wednesday 13 September 2023 at 07:28, United Kingdom
The UK economy contracted by 0.5% in July, according to early official figures that showed damage from strikes and wet summer weather.
The decline, which was worse than many economists had expected, followed an unrevised 0.5% increase in GDP compared to the previous month, the Office for National Statistics (ONS) said.
Director of Economic Statistics, Darren Morgan, said of the yo-yo performance: “Our preliminary estimates for July show that GDP fell; however, the broader picture looks more positive, with the economy growing in the services, production and construction sectors in 2019.” The last three months.
“In July, industrial action by healthcare workers and teachers negatively impacted services and was a weaker month for building and construction selling by pieces because of the bad weather.
“Manufacturing also fell after rebounding from the impact of an additional bank holiday in May.
“A busy schedule of sporting events and increased park visits has provided a slight boost.”
These figures were released against the backdrop of recession fears due to… Economic inflation Headwinds continue to face households and businesses.
It also reflects the impact of the measures taken by the Bank of England to control the pace of price rises.
The bank faces a delicate balancing act in determining how much strength to extract from the economy through its program of 14 consecutive interest rate increases so far.
Its battle against inflation has taken its toll, as a sharp rise in borrowing costs has pushed mortgage payments and rental property prices skyrocketing, increasing the financial burden on households.
Financial markets expect the bank to impose another interest rate increase of 0.25 percentage points next week due to ongoing concerns about inflation. The pace of wage growthwhich is at a 22-year high and is currently exceeding the inflation measure of the Consumer Price Index (CPI).
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Why is the end of interest rate hikes now in sight?
Policymakers fear that higher wage awards will only fuel price growth in the economy in the coming months, prompting further action on interest rates.
The next inflation numbers, due within a week, will also be closely scrutinized and many economists believe there may be a slight rise in the headline CPI measure due to higher oil prices throughout August.